Government’s Section 1498 authority to regulate the price of drugs

While the federal government should be regulating the price of all drugs, as does every other developed country, Congress has been too much in the thrall of pharmaceutical companies to rein in drug prices and ensure all Americans have access to affordable drugs. Instead, Congress gives drug companies the power to charge what they please for their drugs, even when people’s lives hang in the balance. In fact, our government refuses to use its authority to limit the prices of some life-saving drugs for the public health under 28 U.S.C. Section 1498, as Alexander Zaitchik writes in his new piece for the American Prospect.

Right now, in Louisiana, more than 70,000 people have hepatitis C, a blood disease that is extremely contagious and fatal. But, Gilead charges close to $100,000 a person for the medicine that cures it, and Louisiana cannot afford to provide the medicine to the 35,000 Louisianans who need it.

Hepatitis C is killing more people in the U.S. than every other infectious disease combined. It would cost about $200 billion to treat everyone in the U.S. who needs it. In Kentucky, seven percent of the state’s Medicaid budget went to treating 900 people with hepatitis C, a tiny fraction of the people who need it.

The cost of producing the hepatitis C treatment is between $62 and $216 and bears no relation to the price of the treatment. Gilead has already reaped tens of billions of dollars in profits from its hepatitis C drug alone.

Section 1498 gives the U.S. the right to use a company’s patent in the interest of the public health, the national security and commerce. And, according to Zaitchik, back when, the government exercised that right many times. For example, it used Section 1498 to encourage the availability of lower cost generic drugs. But, since the early 1970’s, the government has refused to exercise this right to bring down the cost of prescription drugs.

Rebekah Gee, the Louisiana Health Secretary is considering asking Secretary of Health and Human Services, Tom Price, to use Section 1498 to spur the production of generic versions of the hepatitis C treatment for which Gilead currently holds the exclusive license. Otherwise, Gilead’s large price tag for its hepatitis C drug likely will lead thousands of people with hepatitis C to die unnecessarily.

Under Section 1498, the government would have to pay Gilead a “reasonable price” if it infringed on its patent. But, it’s fair to assume that Secretary Price will not grant Gee’s request. Secretary price has historically placed the rights of corporations to reap profits ahead of people’s lives.

1 Comment

You left out some important information.
The tax payers paid for the development of this drug. The VA and NIH provided the grants that resulted in its discovery. The scientist, working for a public university, under contract, patented this drug and sold it.
The tax payers also footed the bill for testing and bringing this drug to market.
Someone explain why the people are paying for a drug they paid for…